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24 Cards in this Set
- Front
- Back
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The Fundamental Economic Problem |
People have unlimited desires, but limited resources to satisfy those desires; scarcity |
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Economics |
The science of human efforts to satisfy scarcity |
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Because of scarcity, what are people forced to do? |
Make decisions or choices |
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The 3 Basic Economic Questions |
1) What to produce? 2) How will I produce it? 3) For whom am I producing for? |
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Self Interest |
Choices made for oneself |
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Social Interest |
Choices made for the greater good; best for society |
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The Invisible Hand |
By acting for one’s own self-Interest, society is therefore bettered |
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Trade off |
Giving up one thing for another |
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Opportunity Cost |
The cost of the next best alternative whenever a choice is made; the cost of what you could have had |
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Explicit Cost |
Out of pocket expenses |
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Implicit Cost |
Those things forgone that do not show up in an account statement |
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Benefit |
Gain from a transaction |
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Rational choice |
The choice that yields the most benefit |
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Marginal cost |
The cost of producing it getting one more additional item |
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Marginal Benefit |
The gain of getting or producing one more additional item |
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Incentives |
Things that motivate people to act |
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Factors of Production |
Land Labor Capital Entrepreneurship |
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Value |
Relative worth of something or someone usually expressed in money |
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Capitol Good |
Tools, factories, etc |
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Consumer Good |
The “final good” that is consumed |
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Production efficiency |
Increasing output while decreasing input |
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Specialization |
Productive input do whatever they are able to do best |
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Absolute advantage |
Being more productive using fewer inputs than another producer |
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Comparative advantage |
Ability to produce a good at a lower opportunity cost |
